Open Letter on the Patient Protection and Affordable Care Act from Iowa Insurance Commissioner Nick Gerhart

October 11, 2013

The Patient Protection and Affordable Care Act (PPACA) will transform health care and health care insurance nationwide. Significant changes under PPACA include: the elimination of any consideration of a pre-existing condition for acceptance of an application for coverage, the removal of all annual and lifetime benefit maximums, the extension of coverage for children covered under a parent's plan to age 26, and minimum essential benefit standards to be followed by all plans. Rates for coverage for these plans will vary based on the plan chosen, your age, where you reside, whether or not you smoke, and the number of individuals within your family.

Under the leadership of Gov. Terry E. Branstad and Lt. Gov. Kim Reynolds, Iowa has taken a common sense approach to implementing PPACA. The primary responsibility of the Iowa Insurance Division (The Division) in the implementation of PPACA was to review qualified health plans and certify that the plans comply with statutory requirements. The Division certified plans from ten companies to offer health coverage and dental coverage in the upcoming federally facilitated marketplace. The Department of Health and Human Services has now signed contracts with those companies approving the offering of their plans in the marketplace. Two of the medical health plan carriers offer plans in every county in the State of Iowa.

The marketplace will be federally run and managed. The marketplace will be readily accessible at www.healthcare.gov. All plans available in the State of Iowa can be viewed on the website with open enrollment beginning Oct. 1, 2013. Iowans will be able to enroll in individual, family and small group plans (1-50 employees) during the initial six-month open enrollment period from October 1, 2013 through March 31, 2014.

The individual mandate included in PPACA requires that beginning in 2014 individuals must obtain minimum essential coverage. This is defined as insurance coverage with an actuarial value of 60% (called a Bronze level plan on the marketplace). If you do not have minimum essential coverage you may be required to pay the individual fine of $95 or 1% of income, whichever is greater in 2014. Other levels (Silver, Gold and Platinum) feature plans with increasing actuarial values of 70%, 80% and 90% respectively. Actuarial value is the percentage of total average costs for covered benefits that a plan will pay. For example, if a plan has an actuarial value of 70%, on average, a person would be responsible for 30% of the costs of all covered benefits.

An individual's premiums may be offset by tax credits. Individuals from 100% of federal poverty level (FPL) up to 400% of federal poverty level ($11,490.00-$45,960.00 for an individual and $23,550.00-$94,200.00 for a family of four) will qualify for tax credits. Iowans must provide certain information in the application process to determine eligibility for an advance premium tax credit.

While the federal government is responsible for consumer assistance and education in Iowa, the Insurance Division will supplement these efforts, working with interested parties to help educate Iowans. Iowans will be able to enroll in qualified health plans through three Navigator organizations throughout the state, certified application counselors and insurance agents and brokers. Collectively, these individuals and organizations will be critical in helping Iowans through these complex decisions. Individuals and small businesses can also seek help through healthcare.gov with the online chat feature or call the toll free number 800-318-2596 for the marketplace to talk to someone for assistance with enrolling or questions.

As Iowa Insurance Commissioner, I want to outline the following key points for Iowans to consider prior purchasing any insurance on the marketplace:

Make sure your physician is in the network of the plan you are purchasing. Some plans in the marketplace are narrow network plans and you may need to locate a new physician if your current physician is not in the plan's network.

Make sure the drugs you need are covered if you require certain drugs for ongoing treatment. A qualified health plan is only required to cover one drug from each United States Pharmacopeia (USP) category. Individuals will have a right to appeal to get medically necessary drugs covered.

Understand the costs related to your plan. Depending upon the plan you purchase, the amount you will be required to pay for deductibles and coinsurance may vary.

Understand that you will not qualify for a tax credit if you have access to affordable minimum essential coverage through your employer. Affordable coverage is defined as 9.5% of your household income based upon the single employee's premium and coverage of 60% of your insurance costs.

Tax credits are available only for plans purchased on the marketplace. You are not eligible for tax credits if you purchase insurance outside of the marketplace or if you continue on the health insurance plan you have currently.

Failure to obtain minimum essential coverage will subject you to a penalty based on a minimum flat rate or a percentage of your income, whichever is greater.

Medicare coverage is not impacted by these changes. You must still enroll for Medicare or supplemental insurance during the separate open enrollment held every year for those types of coverage.

All plans certified by the Division will be available on www.healthcare.gov on October 1st and will meet the definition of minimum essential coverage. The federal number to call for assistance is 800-318-2596.

Be wary of fraud. There may be more opportunities for bad actors to steal identities or promote non-existent or minimal coverage plans as qualified health plans meeting new health plan standards. Use a licensed agent or broker or work with a navigator.